Following this transaction, Hyatt manages eight hotels for Xenia
Xenia Hotels & Resorts acquired Hyatt Regency Scottsdale Resort & Spa at Gainey Ranch, a 493-room upper upscale resort located in Scottsdale, Arizona, and Royal Palms Resort & Spa, a 119-room luxury resort located in Phoenix, Arizona, on October 4. The latter property is part of The Unbound Collection by Hyatt.
The company acquired the two hotels from affiliates of Hyatt Hotels Corporation for a combined purchase price of $305 million, or approximately $498,350 per key. The purchase price represents an estimated 12.6x multiple on 2017 forecasted Hotel EBITDA. The company currently forecasts that the hotels will generate approximately $6 million of Hotel EBITDA for the remainder of 2017.
“The acquisition of Hyatt Regency Scottsdale and Royal Palms demonstrates our continued effort to invest in high-quality, uniquely positioned, premium full service and lifestyle hotels in top lodging markets,” stated Marcel Verbaas, president and CEO of Xenia. “We are thrilled to have been able to add two terrific hotels in one of our target markets that benefits from many diverse demand generators. While the hotels are in good physical condition and have strong in-place cash flows, we believe we will be able to drive further growth as we work with Hyatt to continue to optimize operations, reap the benefits of the recent branding of Royal Palms and make targeted capital improvements to further upgrade both properties. The market boasts relatively low supply growth over the next several years and the combination of these two hotels, each of which [is] focused on different segments within the overall lodging market, positions us well to take advantage of all the unique demand drivers of the Scottsdale area.”
Royal Palms Resort & Spa
Hyatt Regency Scottsdale Resort & Spa at Gainey Ranch houses 493-rooms, 70,000 square feet of meeting space, and amenities including a 2.5-acre resort pool, eight food and beverage outlets, four tennis courts, Spa Avania, and access to 27-holes of golf.
Royal Palms Resort & Spa, located along the Camelback corridor, is a luxury resort that is a part of The Unbound Collection by Hyatt. The property is an iconic historic hotel in the Phoenix area with 119-rooms, 20,000 square feet of meeting space, T. Cook’s, an award-winning Mediterranean restaurant, The Mix Up Bar, and the Alvadora Spa.
Both hotels will continue to be managed by Hyatt. Following this transaction, Hyatt manages eight hotels for Xenia.
“We are proud to further grow our portfolio with Xenia, as we work together to advance Hyatt’s asset recycling strategy,” said Steve Haggerty, global head of capital strategy and franchising for Hyatt.
The acquisition was funded with a combination of cash available on the company’s balance sheet, a new $100 million mortgage loan, and a new $125 million senior unsecured term loan. The new mortgage loan is collateralized by the Renaissance Atlanta Waverly Hotel & Convention Center, matures in August 2024, and bears an interest rate of LIBOR plus 210 basis points. The new term loan matures in September 2024 and bears an interest rate based on a pricing grid with a range of 170 to 255 basis points plus LIBOR, determined by the company’s leverage ratio. Based on the company’s pro forma leverage ratio, the current effective interest rate is LIBOR plus 170 basis points. The term loan also includes an accordion option that allows the company to request additional lender commitments up to a total of $125 million.
For more information, visit www.xeniareit.com.